It's never easy to forecast what the economy will do in a given year. A year ago, many economists saw the U.S. growing modestly in 2011. The unemployment rate was expected to remain elevated and interest rates were expected to rise.

However, 2011 proved to be much more volatile than anyone could have imagined. The debt ceiling debacle in Washington ended with the U.S. being stripped of its AAA credit rating, QE2 ended, and a slew of overseas events threw a bunch of curveballs at the economy: Japan's earthquake and tsunami, Thailand's floods, the Arab spring, and the escalation of the eurozone debt crisis.

No one is expected to forecast these events perfectly. Nevertheless, the most accurate forecasters are always praised for having foresight worthy of Nostradamus.

Background

Investors often rely on the forecasts of economists to help shape their investment strategies. However, the research and forecasts of some of the best economists are available exclusively to clients of certain brokerage firms and banks. So, which brokers and banks should investors head to?

Economic Predictions Study

We reviewed the 2011 forecasts each major research department made for five key economic measures: GDP growth, inflation, unemployment, interest rates, and foreign exchange. We then compared those predictions with the actual numbers. Finally, we took a weighted average of the magnitudes of errors to compute an accuracy score. (For more details, see our methodology.)

Our ranking identifies the lead U.S. economist from each firm. However, we should note that most firms employ multiple economists and also rely on other analysts who make separate interest rate and currency forecasts.